Heh heh heh heh heh – again
News today that the father-son founders of GMB Capital have pled guilty to fraud and will spend five years in jail. What did these guys do? They promised investors that they’d trade their money using super-secret algorithms invented by the farther, MIT professor Gabriel Bitran , and instead gave the money to Walter Noel’s fund of funds Tremont Group, which in turn shoveled it over to Bernie Madoff.
So the Bitrans are guilty of telling investors that they’d employ one trading strategy but instead, they simply entrusted the money to a fund of funds group which, unfortunately was run by Walter Noel.
Walter Noel promised investors that he’d place their money with a meticulously selected group of other hedge funds, each managed by individuals scrupulously vetted by Noel and his experts. Instead, he did no due diligence, he used no other hedge funds, turned everything over to a single fund, the Madoff Scam LLC, and lost everything.
“The Bitrans’ funds suffered losses of more than $140 million. The men paid themselves as much as $16 million in management fees over the life of the businesses and recovered $12 million of their own investments when the funds were doing poorly, the U.S. said, adding that the two discussed their scheme in e-mail exchanges.”
Noel and his co-conspirators lost billions, paid themselves hundreds of millions of dollars, and have paid back something like $50 million of that, leaving them plenty of money to maintain the Noel lifestyle, keep their multiple residence, jet and cruise around the world and buy NYC townhouses for the five Noel fillies.
Walt seems to be shaping up as the Greenwich version of Jon Corzine; funny, he doesn’t look smart enough or have secrets enough to pull that off.
For What It's Worth 
He must have found the secret golden tablets that Slippery hid on Conyers farm.
Of course he skates away. They ain’t never gonna ketch up with him.
Madoff, that fool, is a little more old skool. Guess he decided it was time to cool his butt, ’cause he just threw in the towel.
Why Walt was never charged with lying about due diligence as these guys were mystifies me. The only difference I see is that these two admitted it in emails, while Walt whined about being a victim, despite the fact that he and his partners collected about $1 billion in fees while their investors lost about $1 billion.
Walter Noel is a despicable fraud without honor or shame. In a just world, he would be required to return his unearned fees to his victims.
Jon Corzine owes it all to fancy footwork.
What is Noel’s political leaning? Is he a known Dem sympathizer/donor? I’d have to assume yes to be getting away with fraud, and as others have said, Walter is holding four aces up his sleeve. I don’t know how someone lives day to day as if no wrongdoing was done. It says he has no heart and soul, but that’s a given to be able to perpetrate such crimes against fellow mankind.
Walter Noel and Ezra Merkin are guilty of fraud, period. Anyone who claimed to be providing due diligence for clients and allocated money, in this case all, to Bernie Madoff clearly did not due any diligence and any claims to be duped are just that, claims. Any junior analyst undertaking professional due diligence on Madoff would have hit red flags within 15 minutes, to wit:
Madoff had no recognizable outside accountant. He had a retired old acquaintance with a office in a strip mall. The should have been the first and ultimate red flag
Madoff had no outside administrator. If you were stupid enough to miss the accountant flag, this should have done it
Madoff had no recognizable outside counsel: ditto above
Madoff did not charge the typical hedge fund fee of say 2% of assets and 20% of profits. He just charged commissions. ( a reason the Fund of Fund boys loved him because they could pile on their fees without killing the returns to LP investors)
That is 4 red flags and those issues are usually the first 4 items on a due diligence checklist whose questions to be addressed often run to over 100 pages (Yes, I have seen them that large)
OK, here is what gets little mention
The SEC actually audited Madoff’s operation and it is here that he should have been caught red handed. Standard protocol in any outside audit is to “trust but verify” as in take what the auditee says at face and then independently verify the “facts”. The SEC auditors failed the basic Audit 101 of independent verification. When presented with a list of Madoff positions (stocks), the SOP is to send an independent confirmation request to either the custodian or in this case to the depository that allegedly held the positions on his behalf. That would have been DTC. That was not done. Had they done so Madoff would have been outed right then. So in effect the SEC gave a clean bill of health to a Ponzi Scheme. That was shopped around by those shoveling money into Madoff. “If the SEC said he was legit, than that is my due diligence”. No on at the SEC bore any consequences for this gross negligence.
To my knowledge there were many institutions who provided professional due diligence for alternative fund managers that did not approve Madoff for their investors (I worked at one at the time). This was a very sticky issue given the fact that Madoff would not open his operations to legitimate scrutiny so it was difficult for someone on the outside looking in to say it was a fraud. What typically dinged him in these cases was the flags noted above and the fact that his returns were completely divorced from the markets or any other style box of hedge fund managers. He was not referred to as the Jewish T-bill for nothing. A lot of the push back came in the form of professional jealousy as in ” you are just bad mouthing him because you can’t produce those kind of consistent returns”. This is why Harry Markopolos, the man who hounded the SEC to investigate Madoff, did not get traction with the regulators. As a money manager for wealthy individuals I got this push back from prospective clients whom the institution would introduce me as part of business development. The meetings would last about 5 minutes ( I had cut them down from 30 minutes because the extra 25 minutes was a waste of time) and consisting of me asking how “Bernie” made his money and the prospect responding “I don’t know”. Followed by “If you don’t know how he makes his money you probably shouldn’t have money with him” .
These 2 are guilty, guilty, guilty and I would no problem saying right to their faces.They are just well dressed common thieves, no more no less. In fact I used to see Merkin skulking out his office on Park Ave and 57th Street after Bernie blew up. He had his head down with his idiodic hat covering most of his face. POS
If that is not enough read these
http://www.baltimoresun.com/business/sns-rt-us-madoff-feederfunds-20140808,0,5566070.story
http://www.foxbusiness.com/economy-policy/2014/03/27/no-jail-time-for-madoff-banking-and-feeder-fund-pals/
Didn’t Bernie act as his own custodian? I think he did. Add red flag #5.
Agreed.
Not a fan of the Noels, but I think this type of “humor” is over-the-top.
agree. wholly inappropriate “humor”. dislike them but threatening is too low.
Just saw the comment you’re responding to and I totally agree – I’ve moved it into the garbage, where it belongs.
Dude –
You scribbled “he doesn’t look smart enough or have secrets enough to pull that off”. In reference to me!! You little vermin. I’m smart! I can handle things! Not like everybody says… like dumb… I’M SMART AND I WANT RESPECT!! Fredo Dude!!! THE GODFATHER!!
And secrets? You want secrets? I know more secrets than frigging Edgar Jay HOOVER!! I know who is cheating on who, who is fleecing the IRS, who is violating the FAR regulations, and who your first boyfriend was. I can get you any secrets you want. Hell, I can even get you a toe by 8 o’clock tonight… with green nail polish. You fucking amateur… THE BIG LEBOWSKI DUDE!!! A CLASSIC!!
And what was the post you deleted? Did someone beside you slander me?
Balloon Head.
Your Pal,
Walt
His website ( and probably their marketing materials) touted their detailed and elaborate due diligence, they did none. They sold securities on this basis. Slam dunk securities fraud case.
I think you have it wrong, Noel was Fairfield Greenwich Group, another feeder fund like Tremont was, i don’t think he was related to Tremont at all.
Both should be in jail.
Correct – Tremont was based in Rye and bought by Mass Mutual at some point before it all exploded.
Correct, Andy D. And, yes, they should be in jail, at least as accessories after the fact.
To the person who wanted to know Wally’s political leanings. He is a rabid right winger who thought that Cliff Robertson (ex-husband of his aquaintance, Dina Merrill) was a Communist.
WN belongs in the garbage too.
Indeed.
Maybe WN will find it rooting through the garbage in search of some food.
How nice to be so distinguished:
http://www.broadwayworld.com/bwwart/article/Photo-Flash-Third-Edition-of-Art-Southampton-Opens-to-Huge-Success-20140813
The feeder funds that acquired millions should be in jail.